End The Year Right Even With Tight Finances

There are a lot of people who are dealing with tight finances and the expenses over the holidays are not helping. It is tough to go through the last month of the year with debt on your shoulders because it is an expensive time for a lot of people. The Christmas holiday is one of the most expensive times of the year and heading into it with huge debt will make it a lot more challenging.

This is not the only reason why people would be having a hard time financially before the year ends. There are simply a good number of consumers who are not having any elbow room in their finances particularly their income. USA Today shares that about 59% of adults are living from paycheck to paycheck.

The sad part of this dilemma is that there are people who have no choice but to take on credit card debt to stay afloat. Relying on credit could already be the start of a vicious cycle of debt that makes it difficult for people to reach their goals. As soon as you have some extra funds to finally put towards your goal, your debt payment will take priority and you again have to depend on credit to get by and the cycle continues. This can result in tight finances for you and your family.

Saving money may not be an exciting part of managing your finances but it is crucial in helping you live a good life in the future. If you are going through some difficult financial situations, there are some things you can do to help you get out of it. Here are some of them worth looking into.

Create a budget

One of the reasons why you might be going through tight finances is because you do not have a household budget. Your budget is one of the most important financial tools you have at your disposal to help you manage your money better. The concept is quite simple but the execution and consistently sticking to your budget takes a lot of work.

If it is your first time putting together a budget, you need to make sure that you list down all your sources of income as well as a list of all your expenses. When you put them side by side, your income should exceed your expenses or else you will be in debt. Not only should you have enough money to pay for everything you need every month, but you also need funds for future use.

This includes saving for retirement, strengthening your emergency fund, or even setting money aside for your children’s college expenses. These would seem to be a tall order when you do not have enough elbow room with your finances but this is why you need a budget in the first place. It allows you to see the big picture in terms of your finances so you can make informed money decisions.

Track your expenses

Tight finances can be challenging, that is why it is also important that you start tracking your expenses. This is important as CNBC shares that about one-third of Americans would have difficulty with a $400 emergency. The idea is that if you know where your money is going, you can make the necessary adjustments to help you refocus and realign those expenses. These changes can help you get a tighter grip on your income and be able to better spread them out over your expense list.

For one, tracking your expenses gives the big picture of where you are putting your money every month. You can track a month’s worth of expenses to give you a better picture of your spending. With this list, you can see if you are spending out of necessity or want. Just like your food budget where you could be ordering take out more than actually cooking food at home.

Categorize your expenses

Once you track your expenses, you can begin to prioritize them according to need. The idea is to start with necessities like food, housing, transportation all the way to your discretionary expenses like money for movies, subscription to streaming services, and even for game tickets. Once you prioritize, you now can move to the next part of the process.

This is the challenging part because you now have to make hard decisions. You need to either start cutting out or lowering down some of the expense items in your list that is way down on your priority list. There could be areas where you can completely take out and then there are some which you can gradually decrease.

If you are not using that gym membership and just like to have it in case you feel like going, better to discontinue it and just go for a run outside. It still affords you exercise your body needs at no extra cost. For entertainment, you do not have to completely take it out but you might want to rethink your approach. You can ask your friends to come over when you stream big games at home but they need to bring food and drinks. This way, you get to enjoy the game with friends but take out the cost of driving to the stadium and share the cost of food as well.

Look for a side hustle to manage tight finances

One of the best things you can do with tight finances is to identify opportunities to bring in more income to your budget. Probably the most traditional way of doing this is putting in some overtime at work to help you get a bigger pay at the end of the month. There are also some people who would pick up a second job they can do after their day job ends.

These can still help you bring in more money to help free up your finances but there can be times it can be exhausting. Putting in extra time at work or picking up a shift at the bar at night can take its toll on you and your body. The good thing is that there are side hustles you can do at the comfort of your house to help you earn more every month.

You can look at online jobs to help you earn more at your own pace. It is also possible to choose the jobs you are good at. You can create written content, put together designs for small businesses, or even offer tutorial services for other people online. Another route is putting the focus on creating income-positive hobbies to bring in extra funds. This is where you use your hobbies to your advantage to help you do what you love to do while earning money on the side.

Pin down your financial goals

When you are going through tight finances, it is a good idea to pin down and use your financial goals as an inspiration to do better. There will be days when you might start to ask yourself why you do what you do. Why do you put in that overtime at work or put so much effort in your side hustle that you might have some sleepless nights in a week?

Apart from improving your current financial situation, you might be more inspired to stay on track when you are reminded about your goal of early retirement. It can also be paying down the house in record time or setting up that business you wanted to have for a long time. Make sure you keep an eye on your goals to help you move forward.

It is tough to be stuck in a situation where you have to manage tight finances while trying to reach your goals but it is doable. You just have to make sure that you keep a close eye on your expenses and your budget and stick to your gameplan.